Traditional cash is becoming obsolete as digital payments become the new standard. This change reflects our changing digital environment rather than being merely a convenience.
Here, we examine the major developments in digital payments and how they will influence the market in 2024 and beyond.
What are Digital Payments?
Digital payments are transactions made using electronic methods instead of physical cash or checks. This covers payment options like the ones listed below, for instance:
- Wire Transfers
- Online Card Payments
- Electronic Wallets
- Direct Debit
- Payments via App
Digital payment methods have a lot of advantages for both businesses and customers. They are faster, more convenient, and also more reliable in terms of safety than traditional cash transactions.
Key Trends Shaping the Digital Payment Industry
If you want to stay ahead of the game, here are ten digital payment trends to watch for:
1. Cross-border Payments
With ongoing globalization, the significance of cross-border payments is unquestionable. A recent study has shown that the global cross-border payment market will hit $238.8 billion by 2027, with a 5.3% annual growth rate. Consequently, companies will have to understand global payment methods and related challenges like exchange rates, fees, and compliance issues.
2. Central Bank Digital Currencies
China, Sweden, South Korea, the United States, and the European Union are still researching or may be launching their own Central Bank Digital Currencies (CBDCs). Consequently, this could change the face of digital currencies. These public-sector digital currencies aim to reduce transactional expenses, increase financial integration, and influence global remittances.
This is a great opportunity for fintech companies to position themselves as indispensable partners to treasurers who are navigating this changing domain with creative solutions.
3. Rise of Buy Now Pay Later (BNPL)
The rapid rise of BNPL solutions, which provide interest-free plans for shoppers, is indisputable over the last five years. A Discover Global Network survey reveals that one out of three consumers used a BNPL plan last year, and 73% of them reused it. While BNPL usage varies in different parts of the world, it is expected to account for nearly a quarter of all e-commerce transactions by 2026.
4. QR Code Payments
Mobile payment using peer applications and other wallets is a recent form of payment method that has gained a lot of popularity. QR code payments are also gradually appearing in different scenarios. For instance, consumers can read about available meals, make an order, and pay with a tip via a QR code in a restaurant. Another study by Juniper Research pointed out that over one-third of the mobile phone user base will use this technology by 2025.
5. Digital Payments via Home Assistants
You may already be able to play music and adjust the temperature in your house with Google Assistant, Apple Siri, or Amazon Alexa. These kinds of home assistants can also be used to place orders online or through a connected app. Users can easily make payments with their smart speakers without using their hands by connecting them to a linked account.
6. AI-Enhanced Security
Sensitive financial data must be transferred for all digital payment methods, including mobile wallets and smart speakers. Scammers are always attempting to take advantage of this vulnerability, which raises security concerns. Banks and card networks already widely use artificial intelligence and machine learning to ensure that financial details are secure. Based on the machine learning approach, different transactions are more easily flagged as suspicious by automated means.
7. Increased Adoption of Biometrics
Biometric authentication is another advancement in the field of digital payment security, apart from AI. Some biometric functions, like face lock and fingerprint scanning, are already available on smartphones. We can expect such features to expand in the next generation of intelligent devices, such as heartbeat frequency analysis and iris recognition.
8. Contactless Payments
The outbreak of the global pandemic forced the use of cashless payments and digital wallets, thus making more physical stores use contactless payment technologies. NFC payments refer to a technology that allows data to be exchanged between a device, a bank card, and a payment terminal.
This practice is expected to remain the same in 2024 mainly because it is advantageous to the customer. Juniper Research estimates that the worldwide value of transactions involving contactless payments will be over 11 trillion US dollars by the year 2027.
9. Embedded Payments
Embedded payments add payment features directly into an app or software that isn’t focused on financial services. They allow users to make payments without having to move to another app.
Based on an IDC estimation, by 2030, 74% of consumers’ digital payments will happen through non-financial players with payment systems integrated into their value chain. In the past, the paymaster was a bank, but these innovations imply that literal payments by banks will not be the norm in the future.
10. Digital Wallets
Digital wallets have become the predominant digital payment method throughout the globe. Customers can make payments without even needing to enter their personal details, and several cards can be saved in their wallets. Furthermore, the information that may be stored in mobile payment systems, such as Apple Pay or Google Pay, includes gift cards, loyalty cards, tickets, identification cards, and immunization records.
The use of digital wallets increased during the pandemic and social isolation. The two biggest players are Alipay and Tenpay, and they are particularly well-liked in China.
Digital wallets will continue to gain popularity in 2024 and beyond. According to a Transparency Market Research (TMR) report, the mobile wallet market is expected to reach $16.2 trillion by 2031. Juniper Research predicted that 2028 digital wallet transactions would reach over $16 trillion, up from $9 trillion in 2023.
The Evolution of Digital Payments
Thus, the role of money is shifting from cash to non-cash forms, and the concept of payment is becoming increasingly digital. The availability of smart mobile gadgets and Internet banking has led to a variety of payment systems that are personal, fast, and secure. Ranging from cross-border payments and digitized currencies to AI-driven security enhancements and biometric authentication, the digital payments industry is in a phase of transition. Trends such as BNPL, the increasing popularity of QR code payments, and the shift towards digital wallets are financially changing consumer and business relations. It’s not just about convenience; it’s about our world and the preference for performing point-of-sale transactions without cash.
Make Digital Payments Effortless with Cheqly
A digital wallet is an app that allows financial transactions to be carried out on connected devices. It makes the payment process more efficient and ensures the safety of the transaction. Cheqly, a full-stack neobank specifically tailored for startups and small businesses, offers a virtual debit card for online purchases. Additionally, this card can be connected to mobile wallets like Google Pay, Apple Pay, and Samsung Pay to process transactions in physical stores safely and quickly. Sign up for a Cheqly account to get your virtual debit card now, and start streamlining your digital payments for a better business future.